"Following its spin-off from Alcoa Inc (now renamed Arconic), we initiate Alcoa Corp with a 12-month Price Target of $26/share and Sell rating. Shares have rallied 31% in one month as a newly public company. At this point we believe the stock price more-than-fully reflects inferred value from Alumina Ltd, which accounts for over 90% of DBe equity value, even at spot pricing. We estimate that downstream assets roughly cover Net Debt and Retirement Obligations. As such, any downward correction in Alumina Ltd (on weaker bauxite or alumina pricing) is a downside risk. A complex structure and Arconic's pending 19.9% stake sales are additional headwinds," said Beristain.

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